Tight vessel spaces restrict bitumen demand in Asia

25 February 2013 07:56[Source: ICIS news]

SINGAPORE (ICIS)--Asia's bitumen demand has been restricted as buyers from South Korea, Taiwan, Japan and Thailand were forced to cancel their purchasing plans because of tight vessel spaces, industry sources said on Monday.

Most bitumen vessels have been booked to ship cargoes to Australia, which is now in its peak demand season, they said.

Australia's demand is particularly strong this year as the country’s bitumen producers have all stopped production since December 2012 due to environmental concerns, which leaves the country solely dependent on imports, traders said.

At least 13 vessels, each with a carrying capacity of over 5,000 deadweight tonne (dwt), will be operating on the routes between Australia and Oceania in January-May, as compared with the usual level of six to eight vessels, ICIS data showed.

Shipowners also prefer sending cargoes to Australia because that generates higher margins than other regional routes, a shipowner said.

As Australia is further away from Asia, an increase of one vessel on routes between Singapore and Australia means a loss of two vessels serving Asia, according to shipowners.

Tight availability of vessels has driven up freight rates in Asia. The freight rates for carrying bitumen from Singapore to Indonesia rose by $5/tonne (€4/tonne) to $38-39/tonne on 22 February from late December 2012. The rates for carrying bitumen from South Korea to Nanjing, east China, increased by $6/tonne to $39-40/tonne, market sources said.

The supply tightness of Asia's bitumen vessels is expected to last till May when Australia's demand falters, according to industry sources.